Despite a seemingly bullish KLCI, the second and third liners are showing signs of weakness especially in construction, plantation and property stocks. It remained very much a stock-picking market and traders have to be wary of holding on to the wrong stocks esp. if they are in a bear rebound only. The US and Europe markets are holding up despite negative news from trade wars, geopolitical rhetorics in Iran and Turkey and falling oil prices. The rout in the major Asian markets seemed to have been temporarily completed and a rebound may be on the way. Against this backdrop, the KLCI rally needs to be respected for whatever reasons above 1800. A balanced approach for traders in this scenario is to play the stronger stocks and sectors only and trade speculative stocks with lesser exposure and avoid overtrading.
We had to exit our 50% exposure in JCY, and in Opcom, as their stop loss was triggered. Refer to the Scalping Sheet for details. At this juncture, we are willing to ride the market on existing profitable position but continue to be alert to close out stop loss position quickly. We would conserve some cash to pick up cheap second/third liners later if their current rebound is proven to be merely a fourth wave bear rebound.
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